[Bitcoin-development] First-Seen-Safe Replace-by-Fee

[Bitcoin-development] First-Seen-Safe Replace-by-Fee

[Peter Todd]

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Summary
-------

First-seen-safe replace-by-fee (FSS RBF) does the following:

1) Give users effective ways of getting "stuck" transactions unstuck.
2) Use blockchain space efficiently.

without:

3) Changing the status quo with regard to zeroconf.

The current Bitcoin Core implementation has "first-seen" mempool
behavior. Once transaction t1 has been accepted, the transaction is
never removed from the mempool until mined, or double-spent by a
transaction in a block. The author's previously proposed replace-by-fee
replaced this behavior with simply accepting the transaction paying the
highest fee.

FSS RBF is a compromise between these two behaviors. Transactions may be
replaced by higher-fee paying transactions, provided that all outputs in
the previous transaction are still paid by the replacement. While not as
general as standard RBF, and with higher costs than standard RBF, this
still allows fees on transaction to be increased after the fact with
less cost and higher efficiency than child-pays-for-parent in many
common situations; in some situations CPFP is unusable, leaving RBF as
the only option.


Semantics
---------

For reference, standard replace-by-fee has the following criteria for
determining whether to replace a transaction.

1) t2 pays > fees than t1

2) The delta fees pay by t2, t2.fee - t1.fee, are >= the minimum fee
   required to relay t2. (t2.size * min_fee_per_kb)

3) t2 pays more fees/kb than t1

FSS RBF adds the following additional criteria to replace-by-fee before
allowing a transaction t1 to be replaced with t2:

1) All outputs of t1 exist in t2 and pay >= the value in t1.

2) All outputs of t1 are unspent.

3) The order of outputs in t2 is the same as in t1 with additional new
   outputs at the end of the output list.

4) t2 only conflicts with a single transaction, t1

5) t2 does not spend any outputs of t1 (which would make it an invalid
   transaction, impossible to mine)

These additional criteria respect the existing "first-seen" behavior of
the Bitcoin Core mempool implementation, such that once an address is
payed some amount of BTC, all subsequent replacement transactions will
pay an equal or greater amount. In short, FSS-RBF is "zeroconf safe" and
has no affect on the ability of attackers to doublespend. (beyond of
course the fact that any changes what-so-ever to mempool behavior are
potential zeroconf doublespend vulnerabilities)


Implementation
--------------

Pull-req for git HEAD: https://github.com/bitcoin/bitcoin/pull/6176

A backport to v0.10.2 is pending.

An implementation of fee bumping respecting FSS rules is available at:

https://github.com/petertodd/replace-by-fee-tools/blob/master/bump-fee.py


Usage Scenarios
---------------

Case 1: Increasing the fee on a single tx
-----------------------------------------

We start with a 1-in-2-out P2PKH using transaction t1, 226 bytes in size
with the minimal relay fee, 2.26uBTC. Increasing the fee while
respecting FSS-RBF rules requires the addition of one more txin, with
the change output value increased appropriately, resulting in
transaction t2, size 374 bytes. If the change txout is sufficient for
the fee increase, increasing the fee via CPFP requires a second
1-in-1-out transaction, 192 bytes, for a total of 418 bytes; if another
input is required, CPFP requires a 2-in-1-out tx, 340 bytes, for a total
of 566 bytes.

Benefits: 11% to 34%+ cost savings, and RBF can increase fees even in
          cases where the original transaction didn't have a change
          output.


Case 2: Paying multiple recipients in succession
------------------------------------------------

We have a 1-in-2-out P2PKH transaction t1, 226 bytes, that pays Alice.
We now need to pay Bob. With plain RBF we'd just add a new outptu and
reduce the value of the change address, a 90% savings. However with FSS
RBF, decreasing the value is not allowed, so we have to add an input.

If the change of t1 is sufficient to pay Bob, a second 1-in-2-out tx can
be created, 2*226=452 bytes in total. With FSS RBF we can replace t1
with a 2-in-3-out tx paying both, increasing the value of the change
output appropriately, resulting in 408 bytes transaction saving 10%

Similar to the above example in the case where the change address of t1
is insufficient to pay Bob the end result is one less transaction output
in the wallet, defragmenting it. Spending these outputs later on would
require two 148 byte inputs compared to one with RBF, resulting in an
overall savings of 25%


Case 3: Paying the same recipient multiple times
------------------------------------------------

For example, consider the situation of an exchange, Acme Bitcoin Sales,
that keeps the majority of coins in cold storage. Acme wants to move
funds to cold storage at the lowest possible cost, taking advantage of
periods of higher capacity. (inevitable due to the poisson nature of
block creation) At the same time they would like to defragment their
incoming outputs to keep redemption costs low, particularly since
spending their high-security 3-of-7 P2SH multisigs is expensive. Acme
creates a low fee transaction with a single output to cold storage,
periodically adding new inputs as funds need to be moved to storage.
Estimating the cost savings here is complex, and depends greatly on
details of Acme's business, but regardless the approach works from a
technical point of view. For instance if Acme's business is such that
the total hotwallet size needed heavily depends on external factors like
volatility, as hotwallet demand decreases throughout a day they can add
inputs to the pending transaction. (simply asking customers to deposit
funds directly to the cold storage is also a useful strategy)

However this is another case where standard RBF is significantly more
useful. For instance, as withdrawal requests come in the exchange can
quickly replace their pending transactions sending funds to cold storage
with transactions sending those funds to customers instead, each time
avoiding multiple costly transactions. In particular, by reducing the
need to access cold storage at all, the security of the cold-stored
funds is increased.


Wallet Compatibility
--------------------

All wallets should treat conflicting incoming transactions as equivalent
so long as the transaction outputs owned by them do not change. In
addition to compatibility with RBF-related practices, this prevents
unnecessary user concern if transactions are mutated. Wallets must not
assume TXIDs are fixed until confirmed in the blockchain; a fixed TXID
is not guaranteed by the Bitcoin protocol.

-- 
'peter'[:-1]@petertodd.org
00000000000000000c7ea0fcac58a9d7267fef8551b9d6a5206bf42b849618cb

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Re: [Bitcoin-development] First-Seen-Safe Replace-by-Fee

[Tom Harding]

I think this is a significant step forward.

I suggest you also need to ensure that no inputs can be removed or 
changed (other than scriptsigs) -- only added.  Otherwise, the semantics 
change too much for the original signers.  Imagine a tx with two inputs 
from different parties.  Should it be easy for party 1 to be able to 
eliminate party 2 as a contributor of funds?  It's not difficult to 
imagine real-world consequences to not having contributed to the 
transaction.  And unless you can think of a reason, tx-level attributes 
like nLocktime should not change either.

The result would be something very like CPFP, but with the new inputs 
and outputs merged into the original tx, keeping most of the overhead 
savings you describe.

It should be submitted to bitcoin/bitcoin because like most inconsistent 
relay policies, inconsistently deployed FSS RBF invites attacks (see 
https://gist.github.com/aalness/a78e3e35b90f52140f0d).

Generally, to be kind to zeroconf:

  - Align relay and validation rules
  - Keep first-seen
  - Relay double-spends as alerts
  - Allow nLocktime transactions into the mempool a bit before they 
become final
  - ...

It's not unlike making a best-effort to reduce sources of malleability.  
FSS RBF should be compatible with this if deployed consistently.



On 5/25/2015 10:13 PM, Peter Todd wrote:
> Summary
> -------
>
> First-seen-safe replace-by-fee (FSS RBF) does the following:
>
> 1) Give users effective ways of getting "stuck" transactions unstuck.
> 2) Use blockchain space efficiently.
>
> without:
>
> 3) Changing the status quo with regard to zeroconf.
>
> The current Bitcoin Core implementation has "first-seen" mempool
> behavior. Once transaction t1 has been accepted, the transaction is
> never removed from the mempool until mined, or double-spent by a
> transaction in a block. The author's previously proposed replace-by-fee
> replaced this behavior with simply accepting the transaction paying the
> highest fee.
>
> FSS RBF is a compromise between these two behaviors. Transactions may be
> replaced by higher-fee paying transactions, provided that all outputs in
> the previous transaction are still paid by the replacement. While not as
> general as standard RBF, and with higher costs than standard RBF, this
> still allows fees on transaction to be increased after the fact with
> less cost and higher efficiency than child-pays-for-parent in many
> common situations; in some situations CPFP is unusable, leaving RBF as
> the only option.
>
>
> Semantics
> ---------
>
> For reference, standard replace-by-fee has the following criteria for
> determining whether to replace a transaction.
>
> 1) t2 pays > fees than t1
>
> 2) The delta fees pay by t2, t2.fee - t1.fee, are >= the minimum fee
>     required to relay t2. (t2.size * min_fee_per_kb)
>
> 3) t2 pays more fees/kb than t1
>
> FSS RBF adds the following additional criteria to replace-by-fee before
> allowing a transaction t1 to be replaced with t2:
>
> 1) All outputs of t1 exist in t2 and pay >= the value in t1.
>
> 2) All outputs of t1 are unspent.
>
> 3) The order of outputs in t2 is the same as in t1 with additional new
>     outputs at the end of the output list.
>
> 4) t2 only conflicts with a single transaction, t1
>
> 5) t2 does not spend any outputs of t1 (which would make it an invalid
>     transaction, impossible to mine)
>
> These additional criteria respect the existing "first-seen" behavior of
> the Bitcoin Core mempool implementation, such that once an address is
> payed some amount of BTC, all subsequent replacement transactions will
> pay an equal or greater amount. In short, FSS-RBF is "zeroconf safe" and
> has no affect on the ability of attackers to doublespend. (beyond of
> course the fact that any changes what-so-ever to mempool behavior are
> potential zeroconf doublespend vulnerabilities)
>
>
> Implementation
> --------------
>
> Pull-req for git HEAD: https://github.com/bitcoin/bitcoin/pull/6176
>
> A backport to v0.10.2 is pending.
>
> An implementation of fee bumping respecting FSS rules is available at:
>
> https://github.com/petertodd/replace-by-fee-tools/blob/master/bump-fee.py
>
>
> Usage Scenarios
> ---------------
>
> Case 1: Increasing the fee on a single tx
> -----------------------------------------
>
> We start with a 1-in-2-out P2PKH using transaction t1, 226 bytes in size
> with the minimal relay fee, 2.26uBTC. Increasing the fee while
> respecting FSS-RBF rules requires the addition of one more txin, with
> the change output value increased appropriately, resulting in
> transaction t2, size 374 bytes. If the change txout is sufficient for
> the fee increase, increasing the fee via CPFP requires a second
> 1-in-1-out transaction, 192 bytes, for a total of 418 bytes; if another
> input is required, CPFP requires a 2-in-1-out tx, 340 bytes, for a total
> of 566 bytes.
>
> Benefits: 11% to 34%+ cost savings, and RBF can increase fees even in
>            cases where the original transaction didn't have a change
>            output.
>
>
> Case 2: Paying multiple recipients in succession
> ------------------------------------------------
>
> We have a 1-in-2-out P2PKH transaction t1, 226 bytes, that pays Alice.
> We now need to pay Bob. With plain RBF we'd just add a new outptu and
> reduce the value of the change address, a 90% savings. However with FSS
> RBF, decreasing the value is not allowed, so we have to add an input.
>
> If the change of t1 is sufficient to pay Bob, a second 1-in-2-out tx can
> be created, 2*226=452 bytes in total. With FSS RBF we can replace t1
> with a 2-in-3-out tx paying both, increasing the value of the change
> output appropriately, resulting in 408 bytes transaction saving 10%
>
> Similar to the above example in the case where the change address of t1
> is insufficient to pay Bob the end result is one less transaction output
> in the wallet, defragmenting it. Spending these outputs later on would
> require two 148 byte inputs compared to one with RBF, resulting in an
> overall savings of 25%
>
>
> Case 3: Paying the same recipient multiple times
> ------------------------------------------------
>
> For example, consider the situation of an exchange, Acme Bitcoin Sales,
> that keeps the majority of coins in cold storage. Acme wants to move
> funds to cold storage at the lowest possible cost, taking advantage of
> periods of higher capacity. (inevitable due to the poisson nature of
> block creation) At the same time they would like to defragment their
> incoming outputs to keep redemption costs low, particularly since
> spending their high-security 3-of-7 P2SH multisigs is expensive. Acme
> creates a low fee transaction with a single output to cold storage,
> periodically adding new inputs as funds need to be moved to storage.
> Estimating the cost savings here is complex, and depends greatly on
> details of Acme's business, but regardless the approach works from a
> technical point of view. For instance if Acme's business is such that
> the total hotwallet size needed heavily depends on external factors like
> volatility, as hotwallet demand decreases throughout a day they can add
> inputs to the pending transaction. (simply asking customers to deposit
> funds directly to the cold storage is also a useful strategy)
>
> However this is another case where standard RBF is significantly more
> useful. For instance, as withdrawal requests come in the exchange can
> quickly replace their pending transactions sending funds to cold storage
> with transactions sending those funds to customers instead, each time
> avoiding multiple costly transactions. In particular, by reducing the
> need to access cold storage at all, the security of the cold-stored
> funds is increased.
>
>
> Wallet Compatibility
> --------------------
>
> All wallets should treat conflicting incoming transactions as equivalent
> so long as the transaction outputs owned by them do not change. In
> addition to compatibility with RBF-related practices, this prevents
> unnecessary user concern if transactions are mutated. Wallets must not
> assume TXIDs are fixed until confirmed in the blockchain; a fixed TXID
> is not guaranteed by the Bitcoin protocol.
>
>

Re: [Bitcoin-development] First-Seen-Safe Replace-by-Fee

[Gregory Maxwell]

On Tue, May 26, 2015 at 5:54 PM, Tom Harding <tomh@thinlink.com> wrote:
>  It's not difficult to
> imagine real-world consequences to not having contributed to the
> transaction.

I'm having a hard time. Can you help me understand a specific case
where this makes a difference.

It appears to be a gratuitous requirement;  if I have another unused
input that happens to be larger by the required fee-- why not just use
it?

The inherent malleability of signatures makes it unreliable to depend
on the signature content of a transaction until its good and buried,
regardless. And an inability to replace an input means you could not
RBF for additional fees without taking change in more cases; there
ought to be a benefit to that.

Re: [Bitcoin-development] First-Seen-Safe Replace-by-Fee

[Danny Thorpe]

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Apologies if this has already been stated and I missed it, but:

Can transactions in a buried block be overridden/replaced by RBF?

Or is RBF strictly limited to transactions that have not yet been
incorporated into a block?

Thanks,
-Danny

On Mon, May 25, 2015 at 10:13 PM, Peter Todd <pete@petertodd.org> wrote:

> Summary
> -------
>
> First-seen-safe replace-by-fee (FSS RBF) does the following:
>
> 1) Give users effective ways of getting "stuck" transactions unstuck.
> 2) Use blockchain space efficiently.
>
> without:
>
> 3) Changing the status quo with regard to zeroconf.
>
> The current Bitcoin Core implementation has "first-seen" mempool
> behavior. Once transaction t1 has been accepted, the transaction is
> never removed from the mempool until mined, or double-spent by a
> transaction in a block. The author's previously proposed replace-by-fee
> replaced this behavior with simply accepting the transaction paying the
> highest fee.
>
> FSS RBF is a compromise between these two behaviors. Transactions may be
> replaced by higher-fee paying transactions, provided that all outputs in
> the previous transaction are still paid by the replacement. While not as
> general as standard RBF, and with higher costs than standard RBF, this
> still allows fees on transaction to be increased after the fact with
> less cost and higher efficiency than child-pays-for-parent in many
> common situations; in some situations CPFP is unusable, leaving RBF as
> the only option.
>
>
> Semantics
> ---------
>
> For reference, standard replace-by-fee has the following criteria for
> determining whether to replace a transaction.
>
> 1) t2 pays > fees than t1
>
> 2) The delta fees pay by t2, t2.fee - t1.fee, are >= the minimum fee
>    required to relay t2. (t2.size * min_fee_per_kb)
>
> 3) t2 pays more fees/kb than t1
>
> FSS RBF adds the following additional criteria to replace-by-fee before
> allowing a transaction t1 to be replaced with t2:
>
> 1) All outputs of t1 exist in t2 and pay >= the value in t1.
>
> 2) All outputs of t1 are unspent.
>
> 3) The order of outputs in t2 is the same as in t1 with additional new
>    outputs at the end of the output list.
>
> 4) t2 only conflicts with a single transaction, t1
>
> 5) t2 does not spend any outputs of t1 (which would make it an invalid
>    transaction, impossible to mine)
>
> These additional criteria respect the existing "first-seen" behavior of
> the Bitcoin Core mempool implementation, such that once an address is
> payed some amount of BTC, all subsequent replacement transactions will
> pay an equal or greater amount. In short, FSS-RBF is "zeroconf safe" and
> has no affect on the ability of attackers to doublespend. (beyond of
> course the fact that any changes what-so-ever to mempool behavior are
> potential zeroconf doublespend vulnerabilities)
>
>
> Implementation
> --------------
>
> Pull-req for git HEAD: https://github.com/bitcoin/bitcoin/pull/6176
>
> A backport to v0.10.2 is pending.
>
> An implementation of fee bumping respecting FSS rules is available at:
>
> https://github.com/petertodd/replace-by-fee-tools/blob/master/bump-fee.py
>
>
> Usage Scenarios
> ---------------
>
> Case 1: Increasing the fee on a single tx
> -----------------------------------------
>
> We start with a 1-in-2-out P2PKH using transaction t1, 226 bytes in size
> with the minimal relay fee, 2.26uBTC. Increasing the fee while
> respecting FSS-RBF rules requires the addition of one more txin, with
> the change output value increased appropriately, resulting in
> transaction t2, size 374 bytes. If the change txout is sufficient for
> the fee increase, increasing the fee via CPFP requires a second
> 1-in-1-out transaction, 192 bytes, for a total of 418 bytes; if another
> input is required, CPFP requires a 2-in-1-out tx, 340 bytes, for a total
> of 566 bytes.
>
> Benefits: 11% to 34%+ cost savings, and RBF can increase fees even in
>           cases where the original transaction didn't have a change
>           output.
>
>
> Case 2: Paying multiple recipients in succession
> ------------------------------------------------
>
> We have a 1-in-2-out P2PKH transaction t1, 226 bytes, that pays Alice.
> We now need to pay Bob. With plain RBF we'd just add a new outptu and
> reduce the value of the change address, a 90% savings. However with FSS
> RBF, decreasing the value is not allowed, so we have to add an input.
>
> If the change of t1 is sufficient to pay Bob, a second 1-in-2-out tx can
> be created, 2*226=452 bytes in total. With FSS RBF we can replace t1
> with a 2-in-3-out tx paying both, increasing the value of the change
> output appropriately, resulting in 408 bytes transaction saving 10%
>
> Similar to the above example in the case where the change address of t1
> is insufficient to pay Bob the end result is one less transaction output
> in the wallet, defragmenting it. Spending these outputs later on would
> require two 148 byte inputs compared to one with RBF, resulting in an
> overall savings of 25%
>
>
> Case 3: Paying the same recipient multiple times
> ------------------------------------------------
>
> For example, consider the situation of an exchange, Acme Bitcoin Sales,
> that keeps the majority of coins in cold storage. Acme wants to move
> funds to cold storage at the lowest possible cost, taking advantage of
> periods of higher capacity. (inevitable due to the poisson nature of
> block creation) At the same time they would like to defragment their
> incoming outputs to keep redemption costs low, particularly since
> spending their high-security 3-of-7 P2SH multisigs is expensive. Acme
> creates a low fee transaction with a single output to cold storage,
> periodically adding new inputs as funds need to be moved to storage.
> Estimating the cost savings here is complex, and depends greatly on
> details of Acme's business, but regardless the approach works from a
> technical point of view. For instance if Acme's business is such that
> the total hotwallet size needed heavily depends on external factors like
> volatility, as hotwallet demand decreases throughout a day they can add
> inputs to the pending transaction. (simply asking customers to deposit
> funds directly to the cold storage is also a useful strategy)
>
> However this is another case where standard RBF is significantly more
> useful. For instance, as withdrawal requests come in the exchange can
> quickly replace their pending transactions sending funds to cold storage
> with transactions sending those funds to customers instead, each time
> avoiding multiple costly transactions. In particular, by reducing the
> need to access cold storage at all, the security of the cold-stored
> funds is increased.
>
>
> Wallet Compatibility
> --------------------
>
> All wallets should treat conflicting incoming transactions as equivalent
> so long as the transaction outputs owned by them do not change. In
> addition to compatibility with RBF-related practices, this prevents
> unnecessary user concern if transactions are mutated. Wallets must not
> assume TXIDs are fixed until confirmed in the blockchain; a fixed TXID
> is not guaranteed by the Bitcoin protocol.
>
> --
> 'peter'[:-1]@petertodd.org
> 00000000000000000c7ea0fcac58a9d7267fef8551b9d6a5206bf42b849618cb
>
>
> ------------------------------------------------------------------------------
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> https://lists.sourceforge.net/lists/listinfo/bitcoin-development
>
>

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Re: [Bitcoin-development] First-Seen-Safe Replace-by-Fee

[Pieter Wuille]

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It's just a mempool policy rule.

Allowing the contents of blocks to change (other than by mining a competing
chain) would be pretty much the largest possible change to Bitcoin's
design....

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Re: [Bitcoin-development] First-Seen-Safe Replace-by-Fee

[Danny Thorpe]

[-- Attachment #1: Type: text/plain, Size: 1228 bytes --]

Thanks for the clarification.

So, since RBF applies only to pending transactions in the mempool awaiting
incorporation into a block, there is a window of opportunity in which the
pending tx is incorporated into a block at the same time that the spender
is constructing and publishing a replacement for that pending tx.

The replacement transaction would be rejected by the peer network as a
double spend because it conflicts with the now confirmed original tx, and
the spender will have to go back and create a new stand-alone transaction
to accomplish what they hoped to do with an RBF replacement.

So an implementation that wishes to take advantage of RBF will still need
to have a "plan B" implementation path to handle the corner case of a
replacement tx being rejected as a double spend.

Is this correct?

I'm just trying to get my head around the implementation cost vs benefit of
RBF in the context of my applications.

Thanks,
-Danny

On Tue, May 26, 2015 at 2:27 PM, Pieter Wuille <pieter.wuille@gmail.com>
wrote:

> It's just a mempool policy rule.
>
> Allowing the contents of blocks to change (other than by mining a
> competing chain) would be pretty much the largest possible change to
> Bitcoin's design....
>

[-- Attachment #2: Type: text/html, Size: 1731 bytes --]

Re: [Bitcoin-development] First-Seen-Safe Replace-by-Fee

[Adam Back]

I think the point is the replacement tx spends the same inputs (plus
additional inputs), so if the original tx is accepted, and your
replacement rejected, thats good news - you dont have to pay the
higher fee, the extra input remains unspent (and can be used later for
other purpose) and the extra change address is unused.

(If you had bundled extra transactions into the replacement, spending
from the additional inputs, then you'll need to resubmit those as a
separate transaction).

(You have to keep in mind re-orgs so for example the original tx could
be put into a block, and then that block could get reorged by another
block that grows into a longer chain with the replacement tx in it (or
vice versa)).

Adam

On 26 May 2015 at 23:09, Danny Thorpe <danny.thorpe@gmail.com> wrote:
> Thanks for the clarification.
>
> So, since RBF applies only to pending transactions in the mempool awaiting
> incorporation into a block, there is a window of opportunity in which the
> pending tx is incorporated into a block at the same time that the spender is
> constructing and publishing a replacement for that pending tx.
>
> The replacement transaction would be rejected by the peer network as a
> double spend because it conflicts with the now confirmed original tx, and
> the spender will have to go back and create a new stand-alone transaction to
> accomplish what they hoped to do with an RBF replacement.
>
> So an implementation that wishes to take advantage of RBF will still need to
> have a "plan B" implementation path to handle the corner case of a
> replacement tx being rejected as a double spend.
>
> Is this correct?
>
> I'm just trying to get my head around the implementation cost vs benefit of
> RBF in the context of my applications.
>
> Thanks,
> -Danny
>
> On Tue, May 26, 2015 at 2:27 PM, Pieter Wuille <pieter.wuille@gmail.com>
> wrote:
>>
>> It's just a mempool policy rule.
>>
>> Allowing the contents of blocks to change (other than by mining a
>> competing chain) would be pretty much the largest possible change to
>> Bitcoin's design....
>
>
>
> ------------------------------------------------------------------------------
>
> _______________________________________________
> Bitcoin-development mailing list
> Bitcoin-development@lists.sourceforge.net
> https://lists.sourceforge.net/lists/listinfo/bitcoin-development
>

Re: [Bitcoin-development] First-Seen-Safe Replace-by-Fee

[Tom Harding]

On 5/26/2015 12:10 PM, Gregory Maxwell wrote:
> On Tue, May 26, 2015 at 5:54 PM, Tom Harding <tomh@thinlink.com> wrote:
>>   It's not difficult to
>> imagine real-world consequences to not having contributed to the
>> transaction.
> I'm having a hard time. Can you help me understand a specific case
> where this makes a difference.
>

The bitcoin transaction is part of a real-world "deal" with unknown 
connections to the other parts.  New inputs combined with new or 
increased outputs can be thought of as a second deal sharing the same 
envelope. That's not the case if paying parties are kicked out of the 
deal, and possibly don't learn about it right away.

A subset of parties to an Armory simulfunding transaction (an actual 
multi-input use case) could replace one signer's input after they 
broadcast it.  Whether that's a problem depends on real-world 
connections.  Maybe the receiver cares where he is paid from or is 
basing a subsequent decision on it.  Maybe a new output is being added, 
whose presence makes the transaction less likely to be confirmed 
quickly, with that speed affecting the business.

With Kalle's Proof of Payment proposed standard, one payer in a 
two-input transaction could decide to boot the other, and claim the 
concert tickets all for himself.  The fact that he pays is not the only 
consideration in the real world -- what if these are the last 2 tickets?

Mempool policy shouldn't help one payer make a unilateral decision to 
become the sole party to a deal after various parties have seen it 
broadcast.


> The inherent malleability of signatures makes it unreliable to depend
> on the signature content of a transaction until its good and buried,
> regardless.

I'd argue that changing how an input is signed doesn't change the deal.  
For example if a different 2 of 3 multisig participants sign, those 3 
people gave up that level of control when they created the multisig.

Replacement is new - we have a choice what kind of warnings we need to 
give to signers of multi-input transactions.  IMHO we should avoid 
needing a stronger warning than is already needed for 0-conf.

Re: [Bitcoin-development] First-Seen-Safe Replace-by-Fee

[Gregory Maxwell]

On Tue, May 26, 2015 at 11:00 PM, Tom Harding <tomh@thinlink.com> wrote:
> The bitcoin transaction is part of a real-world "deal" with unknown
> connections to the other parts

I'm having a hard time parsing this.  You might as well say that its
part of a weeblix for how informative it is, since you've not defined
it.

> not the case if paying parties are kicked out of the deal, and possibly
> don't learn about it right away.

The signatures of a transaction can always be changed any any time,
including by the miner, as they're not signed.

> A subset of parties to an Armory simulfunding transaction (an actual
> multi-input use case) could replace one signer's input after they broadcast
> it.

They can already do this.

> Maybe the
> receiver cares where he is paid from or is basing a subsequent decision on
> it.  Maybe a new output is being added, whose presence makes the transaction
> less likely to be confirmed quickly, with that speed affecting the business.

The RBF behavior always moves in the direction of more prefered or
otherwise the node would not switch to the replacement. Petertodd
should perhaps make that more clear.

But your "maybe"s are what I was asking you to clarify. You said it
wasn't hard to imagine; so I was asking for specific clarification.

> With Kalle's Proof of Payment proposed standard, one payer in a two-input
> transaction could decide to boot the other, and claim the concert tickets
> all for himself.  The fact that he pays is not the only consideration in the
> real world -- what if these are the last 2 tickets?

They can already do that.

> I'd argue that changing how an input is signed doesn't change the deal.  For
> example if a different 2 of 3 multisig participants sign, those 3 people
> gave up that level of control when they created the multisig.

Then why do you not argue that changing the input set does not change
the weeblix?

Why is one case of writing out a participant different that the other
case of writing out a participant?

> Replacement is new - we have a choice what kind of warnings we need to give
> to signers of multi-input transactions.  IMHO we should avoid needing a
> stronger warning than is already needed for 0-conf.

How could a _stronger_ warning be required?

Re: [Bitcoin-development] First-Seen-Safe Replace-by-Fee

[Tom Harding]

On 5/26/2015 4:11 PM, Gregory Maxwell wrote:
> On Tue, May 26, 2015 at 11:00 PM, Tom Harding <tomh@thinlink.com> wrote:
>> The bitcoin transaction is part of a real-world "deal" with unknown
>> connections to the other parts
> I'm having a hard time parsing this.  You might as well say that its
> part of a weeblix for how informative it is, since you've not defined
> it.

For example, you are paying for concert tickets.  The deal is concert 
tickets for bitcoin.  Or you're buying a company with 3 other investors.


>> not the case if paying parties are kicked out of the deal, and possibly
>> don't learn about it right away.
> The signatures of a transaction can always be changed any any time,
> including by the miner, as they're not signed.

Miners can't update the signature on input #0 after removing input #1.


>
>> A subset of parties to an Armory simulfunding transaction (an actual
>> multi-input use case) could replace one signer's input after they broadcast
>> it.
> They can already do this.

Replacement is about how difficult it is to change the tx after it is 
broadcast and seen by observers.


>> Maybe the
>> receiver cares where he is paid from or is basing a subsequent decision on
>> it.  Maybe a new output is being added, whose presence makes the transaction
>> less likely to be confirmed quickly, with that speed affecting the business.
> The RBF behavior always moves in the direction of more prefered or
> otherwise the node would not switch to the replacement. Petertodd
> should perhaps make that more clear.
>
> But your "maybe"s are what I was asking you to clarify. You said it
> wasn't hard to imagine; so I was asking for specific clarification.

Pick any one "maybe".  They're only maybes because it's not realistic 
for them all to happen at once.


>
>> With Kalle's Proof of Payment proposed standard, one payer in a two-input
>> transaction could decide to boot the other, and claim the concert tickets
>> all for himself.  The fact that he pays is not the only consideration in the
>> real world -- what if these are the last 2 tickets?
> They can already do that.

Not without replacement, after broadcast, unless they successfully pay 
twice.


>
>> I'd argue that changing how an input is signed doesn't change the deal.  For
>> example if a different 2 of 3 multisig participants sign, those 3 people
>> gave up that level of control when they created the multisig.
> Then why do you not argue that changing the input set does not change
> the weeblix?
>
> Why is one case of writing out a participant different that the other
> case of writing out a participant?

In the multisig input case, each signer already accepted the possibility 
of being written out.  Peter Todd's proposal is in the spirit of not 
willfully making unconfirmed txes less reliable.  I'm suggesting that 
multi-input signers should be included in the set of people for whom 
they don't get less reliable.


>
>> Replacement is new - we have a choice what kind of warnings we need to give
>> to signers of multi-input transactions.  IMHO we should avoid needing a
>> stronger warning than is already needed for 0-conf.
> How could a _stronger_ warning be required?

We'd have to warn signers to multi-input txes instead of just warning 
receivers.

Re: [Bitcoin-development] First-Seen-Safe Replace-by-Fee

[Peter Todd]

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On Tue, May 26, 2015 at 01:13:05AM -0400, Peter Todd wrote:
> Case 1: Increasing the fee on a single tx
> -----------------------------------------
> 
> We start with a 1-in-2-out P2PKH using transaction t1, 226 bytes in size
> with the minimal relay fee, 2.26uBTC. Increasing the fee while
> respecting FSS-RBF rules requires the addition of one more txin, with
> the change output value increased appropriately, resulting in
> transaction t2, size 374 bytes. If the change txout is sufficient for
> the fee increase, increasing the fee via CPFP requires a second
> 1-in-1-out transaction, 192 bytes, for a total of 418 bytes; if another
> input is required, CPFP requires a 2-in-1-out tx, 340 bytes, for a total
> of 566 bytes.
> 
> Benefits: 11% to 34%+ cost savings, and RBF can increase fees even in
>           cases where the original transaction didn't have a change
>           output.

To clarify a point raised(1) on the pull-req itself:

The replacement transaction is allowed to not only add new txin's, but
also replace txins. Suppose t1 is a 2-in-2-out P2PKH using transaction,
374 bytes in size. With CPFP accomplished by a 1-in-1-out tx, 192 bytes,
you have 566 bytes total. With FSS RBF if you have an unspent output
greater in value than one of the outputs spent by t1, you can replace
that output in t1's vin txin set and rebroadcast the transaction, still
374 bytes in size. This gives you a 34% cost savings vs. CPFP.

> Case 2: Paying multiple recipients in succession
> ------------------------------------------------
> 
> We have a 1-in-2-out P2PKH transaction t1, 226 bytes, that pays Alice.
> We now need to pay Bob. With plain RBF we'd just add a new outptu and
> reduce the value of the change address, a 90% savings. However with FSS
> RBF, decreasing the value is not allowed, so we have to add an input.
> 
> If the change of t1 is sufficient to pay Bob, a second 1-in-2-out tx can
> be created, 2*226=452 bytes in total. With FSS RBF we can replace t1
> with a 2-in-3-out tx paying both, increasing the value of the change
> output appropriately, resulting in 408 bytes transaction saving 10%
> 
> Similar to the above example in the case where the change address of t1
> is insufficient to pay Bob the end result is one less transaction output
> in the wallet, defragmenting it. Spending these outputs later on would
> require two 148 byte inputs compared to one with RBF, resulting in an
> overall savings of 25%

Similarly in the multiple recipients case, if sufficiently large
outputs are available the additional funds can be obtained by swapping
one input for another.

For instance if Alice has three outputs, 1.0, 0.5, and 0.2 BTC, and
needs to pay Bob 1.1 BTC, she can create t1:

    1.0 -> Bob   1.1
    0.2 -> Alice 0.1

If she then needs to pay Charlie 0.2 BTC she can doublespend that with:

    1.0 -> Bob     1.1
    0.5 -> Charlie 0.2
        -> Alice   0.2

Note that care does need to be taken to ensure that multiple rounds of
this always leave at least one input unchanged.


1) https://github.com/bitcoin/bitcoin/pull/6176#issuecomment-105630255

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[Bitcoin-development] First-Seen-Safe Replace-by-Fee patch against Bitcoin Core v0.10.2

[Peter Todd]

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First-seen-safe Replace-by-Fee is now available as a patch against
v0.10.2:

    https://github.com/petertodd/bitcoin/tree/first-seen-safe-rbf-v0.10.2

I've also had a pull-req against git HEAD open for a few weeks now:

    https://github.com/bitcoin/bitcoin/pull/6176#issuecomment-104877829

I've got some hashing power interested in running this patch in the near
future, so I'm offering a bounty of up to 1 BTC to anyone who can find a
way to attack miners running this patch. Specifically, I'm concerned
about things that would lead to significant losses for those miners. A
total crash would be considered very serious - 1 BTC - while excess
bandwidth usage would be considered minor - more like 0.1 BTC. (remember
that this would have to be bandwidth significantly in excess of existing
attacks)

For reference, here's an example of a crash exploit found by Suhas
Daftuar: https://github.com/bitcoin/bitcoin/pull/6176#issuecomment-104877829

If two people report the same or overlapping issues, first person will
get priority. Adding a new test that demos your exploit to the unit
tests will be looked upon favorably. That said, in general I'm not going
to make any hard promises with regards to payouts and will be using my
best judgement. I've got a bit over 2BTC budgetted for this, which is
coming out of my own pockets - I'm not rich! All applicants are however
welcome to troll me on reddit if you think I'm being unfair.


Suhas: speaking of, feel free to email me a Bitcoin address! :)

-- 
'peter'[:-1]@petertodd.org
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